GIPSA Extends Comment Period For Competition Rules

USDA heeded the call of numerous livestock producer groups last week, extending the comment period for its controversial proposed livestock marketing rules by 90 days

Aug 02, 2010

USDA heeded the call of numerous livestock producer groups last week, extending the comment period for its controversial proposed livestock marketing rules by 90 days to Nov. 22.

“Members of Congress from both sides of the aisle were very clear about the critical need to extend the comment period to allow stakeholders to thoroughly analyze the potential impacts of the rule,” says Colin Woodall, vice president of government affairs for the National Cattlemen’s Beef Association (NCBA). “While it’s unfortunate USDA didn’t extend the comment period for a full 120 days as we requested, we’re pleased that stakeholders will have some additional time to further analyze this complex rule and its potential implications on the beef sector, which is the largest segment of the food and fiber industry.”

If you’re unfamiliar with the proposed rule issued by the Grain Inspection, Packers and Stockyards Administration (GIPSA), it will pay to review it at www.gipsa.usda.gov. The proposed regulations include requiring that buyers submit sample contracts for publication on GIPSA’s website, limits marketing arrangements between packers and dealers, and it also removes the need for suppliers to prove harm in order to sue buyers.

“On the surface, this rule has the potential to take the beef industry back 30 years by stifling the innovative efforts of U.S. cattle producers to add value and enhance the quality and safety of their products for consumers in the U.S. and abroad,” Woodall says.

According to a review by the National Pork Producers Council (NPPC), the rule would dictate the terms of contracts, restrict marketing arrangements, require reams of paperwork, create legal uncertainty and limit producers’ ability to negotiate better prices for the animals they sell.

“That’s a recipe for stifling innovation, driving up costs, forcing simple contract disputes into court and – given those adverse consequences – compelling packers to own their animals rather than to contract with farmers like me to raise them,” says Sam Carney, NPPC president.

NCBA and NPPC were among the livestock organizations that requested USDA extend the comment period for the proposed GIPSA rule by 120 days. The original comment period was only 60 days.

Along the way, congressional members voiced their displeasure at the proposed rule. “As evidenced in the bipartisan comments made in yesterday’s (July 20) hearing, USDA has defied the intent of Congress and moved forward on the most sweeping changes to the Packers and Stockyards Act in nearly 100 years – all while making little initial effort to seek feedback from the livestock and poultry industry,” Woodall explains.

According to an open letter last week from Edward Avalos, USDA undersecretary, apparently to clarify the proposed regulations, “This rule does not limit or prohibit marketing agreements, the use of premiums or other value-added activities. This rule does not require anyone to do business with any particular person or require packers to pay all producers the same price.”

The rule does, however, open the door to buyers and sellers being able to sue one another without proof of harm. It does place confidentiality and privacy at risk.

“The rule poses serious privacy concerns and provides no guarantee that producers' private information would not be exposed to the general public, including competitors. The rule also places all producers in jeopardy of litigation by their competitors or the government,” Woodall explains. “Opening the cattle markets to trial lawyers is not in the best interest of the marketplace, and we do not support litigation as a means of securing producer profitability.”